Australians owe $32 billion in credit card debt, according to Reserve Bank figures, and some experts predict this will balloon to almost $50 billion by 2009.

Thats a staggering figure and as it would it appear it's definately on the rise with Baycorp Advantage, a credit information provider, saying that credit card applications were up 11 per cent on last year with 875,000 applications for credit cards in October, November and December.

This is the concern, only seven years ago, the fees incurred on cards was $136 million but they have now soared to a staggering $787 million. This is partly due to an increase in the charge for late payment from $20 to $29.

Analysts it would take five years of minimum repayments to pay off the $2399 shown by the Reserve Bank to be the average credit card debt in December. The average credit limit rose to $6754.

This probably doesn't apply to Australia alone as the trends in other countries are very similar.

From these figures it could be seen that there is a lack of knowledge on how to use credit effectively and safely and also possibly a lack of research into the terms and fees related to the particular card being used. Some say this could be due to the heavy marketing around bonus point systems shifting the customers decision making from 'terms and conditions' to 'what do i get for nothing'.

Consumer groups have renewed calls for reform of the Uniform Credit Code to stop banks promoting unsolicited limit increases, and requiring them to print warnings of how long it will take to repay their debt at current interest rates.

Credit cards are not all bad though. Credit cards are convenient and safer to carry than cash. You can also earn rewards or get cash back on your purchases. They can also help build your credit rating. Sensible and disciplined use are important as well as a good understanding of how your particular card applies charges and choosing the right credit card for you in the first instance.

The important factors should be considered when applying for and using a credit card. Asking questions of yourself is probably the first step. For example 'Do I need a credit card' and 'Will the payments fit into my budget'.

Choosing the right card should involve at least reviewing :

The interest rate - Some cards offer an attractive honeymoon rate although it is the rate after this that is important.

The interest free period - this can differ from card to card.

How is the interest calculated - from the time of purchase or time of statement?

The annual fee - some time bonus systems are offset by this annual fee.

Administration fees - are there any and what are they?

Late payment & over the limit fees - when does it apply and how much?

Other charges - what other charges are there?

Cash advance - if you are going to use review the conditions carefully and be aware of how it works and what charges apply.

Credit cards are a useful item by offering buyers protection in some cases by being able to cancel transactions, offering convienience by eliminating the need to carry cash and an almost necessity for travellers. Research and discipline are the keys success.